exon111

Hello,

Please pardon my less than stellar writing job here, I was in a moped accident yesterday and i'm typing at 10 wpm with my non bandaged left fingers. I'm now in the market for for a Boxster Spyder and ditching 2 wheeled transport. Luckily I learned my lesson without getting killed in the process.

I've been reading a bunch of posts on this forum that in general, porsche leases are not the best deal and buying is usually better. While that makes sense for many people, it seems if you're in a top tax bracket, own a business, and can write off the lease, it changes things, unless I'm misunderstanding something.

I could buy a used Boxster Spyder, but tax wise leasing seems better. I read PFS will lease a CPO vehicle but the monthly payments are high due to the low residual. Please let me know if my logic is flawed here. Say I lease a 57k CPO vehicle for 36 months and residual is an abysmal 21k at the end (i'm making this number up). So that equals $1k in depreciation per month. Then there's money factor aka interest somewhere near 5%. So thats around $270 a month, total 1,270 per month. If I understand this, the low residual leads to a high lease payment, but I will have an option to purchase the vehicle at the end of the lease at the 21k residual. So essentially if I buy the car at that 21k residual price, I was making tax deductible depreciation payments to myself, and really the only extra money I'm paying to Porsche for the lease is the 5% interest rate. Since my ROI is much higher than 5%, that seems like a good deal.

Am I missing something here? If this is right, it seems like every business owner would lease. I know I'm leaving out lease inclusions, but that seems pretty insignificant in the scope of things.

Any input would be greatly appreciated.

flyingpenguin

Depending on mileage you put on the car over 36 months, I think your $21k is at the very low end of what's to be expected on a special car like a Boxster Spyder.

Assuming about 30% tax benefit on depreciation, any number between actual value at end of lease vs. the $21k is a bonus, albeit not a huge one..

I wonder if leasing is the only way to achieve this benefit though..

Mighty Shilling

I've never heard of anyone leasing a used car. ever.

exon111

I haven't either, but when you are getting taxed around 40% of your income with state and fed taxes, being able to write off around $16k a year for a leased car seems to be a whole lot better than just being able to deduct around $4k per year in interest and IRS limited depreciation. Either I'm totally missing something or nobody has figured this out? Guess I need to schedule a consultation with CPA to figure out if my theory here makes any sense. I feel like I must be doing something wrong since nobody else seems to know about this, but the numbers make sense in Excel.

sjfehr

Used Boxsters, especially older ones, hold their value well; don't look at the payment, look at the depreciation and salvage value. For a $300/month $30k car, you'll get back probably $200 after 36 months and $150 after 60.

You could buy it with a home equity loan and write off the interest that way, too.

terbiumactivated

Just a basic FYI, my friend from grade school used to run the leasing for a major marque. He informed me that there are times when a lease is attractive or structured in such a way that choosing it as an option might make sense depending on your needs. However, in general, leasing is a tough way to seek value leverage, I agree with other comments on used leasing as well.

Mighty Shilling

My fiancé and I are leasing a BMW right now... Can't say I would do it again....

Spyerx

Porsches in general do not lease well due to artificially low residuals and high money factors. On the flip side, new BMWs lease really well due to artificially high residuals (you pay less depreciation) and very low money factors (close to 1% with buy-downs). Leases are more attractive in states where you only pay sales/use tax on the payment, some states you pay full tax up front. Also, in cases where you can deduct the cost of the lease as a business expense. Personal situations vary.

Based on what you state above, I would say that is not an attractive lease and you're better paying cash, or using a very low loan, or possibly as mentioned a home equity loan (personally I don't like this, but financially it can make sense) to buy.

Also keep in mind that while used Porsches tend to hold their value well, they are a depreciating asset.

KurtF

The 2011 Boxster Spyder? That was a special edition, limited production car. In the Porsche world, cars like that tend to depreciate slowly and then usually appreciate as more time passes. That car is basically like a speedster version of a Boxster.
To date they have maintained their values well, still fetching in the 50-60K range, and unless you are planning to rack up serious miles I wouldn't expect a 1K per month depreciation. No way it's going be worth 21K in three years. I have a 2000 low milage Boxster S thats worth almost that.
For practicality sake you might want to consider leasing a new 2014 Boxster. While the Spyder was and is a great car the new car will be more practical as a DD. Also the reviews seem to indicate that the new car performance wise has eclipsed the 987 and you can still have it with a six speed manual tranny.
Good luck with the search.

5CHN3LL

Are you intending to write off the lease payments as a business expense? If so, that's a return flag, so you'll want to be able to prove 100% business use. If you can't (I'm guessing most people can't prove 100% business use of a convertible Porsche, but that's just an assumption), you'll owe taxes on the non-business-use amount you claimed as a deduction.

The only return I've ever had audited was the year when I purchased a "company" vehicle (and it wasn't a convertible Porsche), and a CPA friend of mine tells me that returns he's prepared that include business-use vehicles have had a near 100% audit hit rate over the past decade.